How To Easily Clean Up Your Credit Report To Buy A Multifamily Apartment – Video

ccDo you want to buy an apartment building… You better check your credit report! You will need to have excellent credit to qualify for a mortgage on an apartment with no money down.

Aim for a credit score of at least 750 in order to ensure you will not need to make a down payment. Work to improve your credit score before you apply for a mortgage. Review your credit report and rectify any errors. Pay off all outstanding debt and make sure your bills are paid on time regularly. Stop applying for credit about 1 year before you buy your apartment.

What Kind of Property Can You Buy?

You can purchase apartment buildings with five or more units, including mixed-use (commercial and residential space) buildings as long as at least 80% of the space is residential. The building must be graded at least C+ to be eligible for financing — that is, it can’t be rented daily or weekly, it can’t have single-occupancy rooms (like rooming houses), excessive deferred maintenance or obsolescence, or a private well. The property must have been at least 85% occupied for at least the last 90 days before loan application.

What Do You Need to Provide? Applying for an apartment mortgage is different than applying for a home loan in that the property’s ability to pay for itself is more important than your personal financial position. You need to provide the following:

  • Personal financial statement or Fannie Mae Form 1003 (mortgage application);
  • The property’s current rent structure;
  • Two years’ worth of schedule Es for the property or two years of operating income statements;
  • A year-to-date operating income statement;
  • Month-by-month income breakdown of the past 12 months;
  • Photos of the property; and
  • A copy of the purchase agreement.

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